Alaska Passes North Slope Pipeline Liquefied Natural Gas Bill

On Monday, Alaska’s legislature approved Senator Sean Parnell’s plan to join four energy companies in moving ahead on plans to build infrastructure to transport and market 35 trillion cubic feet of North Slope gas to be shipped by an 800-mile pipeline to a liquefied natural gas (“LNG”) export plant. In approving Senate Bill 138, lawmakers authorized the governor to work with Exxon Mobil, BP, and ConocoPhillips, and the pipeline company TransCanada in drafting a project development contract.

The bill passed in the House by a vote of 36-4 on Sunday night. Passage of the bill affirms the commercial agreement signed by the state, the Alaska Gasline Development Corporation, the producers, and TransCanada to advance the Alaska LNG Project. The state of Alaska is now poised to become a 25% owner of the Alaska LNG Project. “The legislation allows the state to take ownership of about 25% of the gas produced for the project in lieu of receiving payments for its royalty share and production taxes,” said Larry Persily, federal coordinator for Alaska natural gas transportation projects. “The state would then sell its 25% of the gas and use the proceeds to pay its processing, pipeline and liquefaction expenses, depositing the balance in the state treasury.”

In a press release from the governor’s office, Governor Parnell said “This is truly a historic moment for Alaskans. By passing Senate Bill 138, the Legislature has put Alaska on a path to controlling her own destiny by becoming an owner in the Alaska LNG Project. Alaskans have waited a long time for a gasline, and for the first time in our history, we have alignment, authorization from the Legislature, and a clear path forward. The Alaska LNG Project has begun.”

The project will now move into the Pre-Front End Engineering and Design phase to refine the cost and engineering aspects of the project. The project is currently estimated to cost between $45 and $65 billion for the line and gas treatment facilities. The Alaska Gasline Development Corporation will be in charge of the project, which will span from the North Slope to Kenai, Alaska. Construction could start in 2019, and be completed by 2023. If it comes to fruition, gas from this infrastructure will hit markets in the mid- 2020s.

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